Thursday, January 29, 2009


The "stimulus" bill that passed the House is quite possibly the worst bill ever. To their credit, not a single Republican voted for the $953 billion spending spree. All this spending will do very little to stimulate the economy but will come back to bite us in the form of higher taxes (paid by us, our children, and probably their children) or inflation. 

Every employed person will get a $500 tax break. About 15% of this (based on statistics from the last round of stimulus checks) will probably be spent, the rest will be saved or used to pay down debt. The business tax cuts do not encourage employment of productivity, instead of, say cutting the payroll tax, which would actually encourage companies to hire people, they go to companies that have lost a lot of money in the past few years. They reward failure instead of encouraging success.

Those are the tax cuts. Then the spending: mostly pork projects (new sod for the Jefferson Memorial, $400 million for STD prevention, $150 million for honey bee insurance, etc.) that are unlikely to produce jobs in a cost-effective manner. Most of the infrastructure projects (even the ones worth doing) won't begin for a while and will do nothing for the economy until the recession is over. Only $170 billion of the total package will be spent this year, $356 billion in 2010, and the other 40% or so after that, when the recession will almost certainly be over. The plan calls for another 250,000 government employees. Don't we have enough bureaucrats sucking up our tax dollars?

Bottom line, huge waste of money - money we don't have. The only good news is that its failure will be another nail in the Keynesian coffin. We will likely run deficits of about 10% of GDP during the Obama administration - 10%! 

Obama claims all this spending will create (or save) 3 million jobs. Great! That comes to $275,000 per job. 

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